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BUDGET 2007 – NEW WAYS TO HELP FILM ... BUT

The new forms of Government assistance to film & TV production outlined in this multi billion dollar budget are (largely) welcome, say producers, as Andrew L. Urban reports, but is Australia really serious about film & TV production when the annual allocation across the FFC and the AFC for production is still somewhere in the region of a paltry $70 million.

The dust won’t settle for a few weeks yet, as the fine print is deciphered, but the film & TV industry has reacted with guarded optimism to the new mechanisms in this multi billion dollar 2007 Budget to help finance production. “We welcome the Government’s recognition that private investment in film & TV production has collapsed and that new systems are needed to help our industry,” said Geoff Brown, Executive Director of the Screen Producers Association of Australia (SPAA).

The rebate of 40% for feature films and 20% for TV drama & docos will replace access to the 10BA tax deductions for investors, which will be phased out, and the Film Licensed Investment Company scheme will not be renewed beyond its current expiry date of 30 June 2007.

"..concerned...the rebate may only deliver marginal gains to the producer"

“Theoretically, the new approach should put producers in the box seat when it comes to raising private investment for film and television productions,” said Brown. “They can lever investment off the back of the substantial equity that the rebate delivers to them and manoeuvre to take best advantage of IP ownership.

“However SPAA is concerned that without 10BA co-investments the rebate may only deliver marginal gains to the producer. All the upside from the rebate will be traded off to attract investors who will not be able to get the traditional tax break on 10BA. They will be asking for much more. It’s likely that the high net worth individual (the conventional 10BA investor) will depart the scene to be replaced by equity investors expecting a capital guarantee on their investment and returns of 15% plus, regardless of the film’s performance.”

SPAA is also concerned about “aspects of the Treasurer’s announcement that the Film Finance Corporation, the Australian Film Commission and Film Australia will merge to form the new Australian Screen Authority (ASA), effective 1 July 2008. We understand that the new rebate cannot be used alongside the FFC – or the new ASA; however we are apprehensive that the new agency is not used to par back the historical role of direct investment in those films which are difficult to fund internationally.”

Brian Rosen, Chief Executive of the Film Finance Corporation is also upbeat: “The coming together of the agencies (FFC, AFC and Film Australia, effective July 1, 2008) combined with the tax offset, I believe shows enormous confidence in the ability of Australian filmmakers to expand their funding opportunities and make a greater range of films here and internationally.” Rosen also noted that before the establishment of the FFC, the AFC was the Government’s primary film agency (Film Australia was always a separate producing entity) and he saw no reason why the amalgamation would not work. “It is a decision driven by a desire to reduce the number of agencies with which the Government has to deal.” Ideally, the outcomes would be the same, but with greater efficiency.

"a significant new support measure to stimulate higher levels of investment"

“The Government has responded strongly to the need to increase the volume of production,” said AFC Chair Maureen Barron. “The new rebate is a significant new support measure to stimulate higher levels of investment in the industry.”

This is all genuine reform and welcome; it has taken considerable backroom work by SPAA (including face to face discussions with Prime Minister John Howard) in which the case for film and tv production to be seen as business was outlined. Film and TV production generates $600 million in spending annually (including offshore productions) and is a vital export generator for Australia – exporting not only services but cultural kudos as well, which has a ripple effect on tourism and other areas of trade. It isn’t just a line in the Arts portfolio; that’s the perception that has snagged policy for so long.

SPAA, the equivalent of a chamber of commerce, is keen to build businesses in the production sector, to allow producers to run sustainable businesses – and to actively seek export opportunities, an essential source of revenue to top up the population-restricted revenues from TV rights and the box office.

Of course, at a time of $15 billion budget surpluses, these changes are still relatively minimal. We have to ask how serious is Australia about its interest in a vibrant and sustainable film & TV production industry when the annual allocation for production is still somewhere in the region of $70 million.

Published May 9, 2007
 

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Brian Rosen, Chief Executive, FFC


Geoff Brown, Executive Director, SPAA

9/5/2007: Extract from the 2007 Budget Papers:
The Government will strengthen and reform Australia's screen media industry, with a package of reforms costing $283 million over four years.

From 1 July 2007, support for international and domestic productions will be provided through a producer tax rebate.

The Government will introduce a 40 per cent refundable tax rebate on domestic feature films and a 20 per cent refundable tax rebate on other eligible domestic media productions including television series and documentaries at a cost of $215 million over four years. The provision of the rebate provides support to domestic productions which have been able to demonstrate market appeal through securing a commitment of private sector financing for the project.

The producer tax rebate will have an international component which incorporates the current refundable film tax offset (RFTO). The rebate for eligible international film production costs will be 15 per cent, an increase from the 12.5 per cent currently provided through the RFTO. Eligibility for international producers will be extended beyond the criteria for the RFTO to include post, digital and visual effects production in Australia where the film is not made in Australia and qualifying expenditure exceeds $5 million. These changes will further increase the competitiveness of Australia as a destination for the production of international films and associated post production work.







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